ITC Hotels Shares Removed from Sensex and BSE Indices: What Investors Need to Know
ITC Hotels’ shares will no longer be part of the Sensex and other BSE indices starting today, February 5, 2025. This move is a crucial milestone in the stock market, as the recently demerged entity of ITC Ltd adjusts to its independent listing.
Why is it Being Removed from the Sensex?
After its demerger from ITC Ltd, ITC Hotels was temporarily included in the Sensex and other BSE indices to facilitate passive fund portfolio rebalancing. However, since ITC Hotels did not hit the lower circuit limit by the cut-off time of 2:00 PM on Tuesday, February 4, the stock is now being removed from all BSE indices before the market opens today.
According to the Bombay Stock Exchange (BSE), “As ITCHOTELS did not hit the lower circuit till the cut-off time, the company will be dropped from all the BSE indices effective prior to the open of trading on Wednesday, February 5, 2025.”
The Hotels Share Price Performance
Its share price saw a decline of 4.16% on Tuesday, closing at ₹164.65 per share on the BSE. The stock had listed separately on Indian exchanges on January 29, 2025, after demerging from ITC Ltd.
Expected Impact on Share Price
The removal of the Hotels from major indices is expected to trigger significant passive selling. Market experts estimate that index funds tracking the Sensex could offload over ₹400 crore worth of the Hotels shares. Additionally, when the Hotels is removed from the NSE Nifty 50, another ₹700 crore worth of passive selling is anticipated.
ITC Hotels Listing Details
When the Hotels debuted on the stock market, its shares were listed at:
- ₹188 on the BSE
- ₹180 on the NSE
This listing was at a steep discount of over 30% to the discovered price of ₹260 (NSE) and ₹270 (BSE). Since then, ITC Hotels’ market capitalization has dropped from over ₹39,000 crore to approximately ₹34,266 crore as of February 4, 2025.
The Hotels Demerger Explained
This Hotels was separated from its parent company, ITC Ltd, as part of a strategic demerger. The demerger was executed at a ratio of 1:10, meaning ITC Ltd shareholders received 1 share of the Hotels for every 10 ITC Ltd shares they held.
- Effective Date of Demerger: January 1, 2025
- Record Date for Demerger: January 6, 2025
- ITC Ltd’s Stake in its Hotels: 40%
The remaining 60% of ITC Hotels’ shares were distributed among ITC Ltd shareholders.
Subject Hotels is A Strong Player in the Hospitality Sector
Despite recent volatility, ITC Hotels remains a key player in the Indian hospitality industry. The company operates:
- 140 hotels with approximately 13,000 keys (rooms) as of October 2024
- Plans to expand to 200+ hotels with 18,000+ keys by 2030
Financial Performance & Growth
This Hotels has shown solid growth in operational performance.
| Financial Metric | FY19 | FY24 | Growth (%) | CAGR (%) |
|---|---|---|---|---|
| Average Room Rate (ARR) | ₹7,900 | ₹12,000 | 51.9% | 8.7% |
| Revenue Per Available Room (RevPAR) | ₹5,200 | ₹8,200 | 57.7% | 9.5% |
- Room sales contributed 52% of total revenue in FY24
- Food & beverage sales accounted for 40%
Healthy Profitability & Strong Balance Sheet
- Return on Capital Employed (RoCE): ~20%
- Occupancy rate (FY24): 69%
- Debt: Negligible, with a net cash surplus
This financial stability positions ITC Hotels for sustained growth in the years ahead.
Market Valuation & Key Ratios
Here are some key financial metrics for ITC Hotels:
| Metric | Value |
|---|---|
| Market Capitalization | ₹34,766 Cr. |
| Current Share Price | ₹167 |
| 52-Week High/Low | ₹189 / ₹155 |
| Industry P/E | 35.8 |
| Debt-to-Equity Ratio | – |
| Dividend Yield | 0.00% |
| Face Value | ₹1.00 |
| Intrinsic Value | – |
| Graham Number | – |
| Piotroski Score | 0.00 |
Future Outlook for ITC Hotels
Despite recent fluctuations in its share price, ITC Hotels remains well-positioned for growth due to its:
- Strong operational performance
- Ambitious expansion plans
- Healthy financial standing with low debt
With a steady rise in room rates, revenue, and occupancy levels, long-term investors may find ITC Hotels an attractive bet in the hospitality sector.
Conclusion
The removal of ITC Hotels from Sensex and BSE indices today is likely to cause near-term volatility. However, the company’s strong fundamentals and expansion plans make it a key player in the hotel industry. Investors should watch the stock closely as it stabilizes post-index exclusion and establishes itself independently in the market.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.